The Elements Of Impact: Lessons Learned From Insurer It Projects

Matthew Josefowicz, President & CEO, Novarica

Matthew Josefowicz, President & CEO, Novarica

Whether a project’s goal is to address immediate business needs or to ensure long-term IT sustainability, CIOs planning and executing these projects know to learn from experience: both their own and others’, both successes and failures. Fortunately, insurer CIOs are often generous about sharing their experiences, and there are many available examples of IT initiatives that had a real positive impact on insurers’ businesses—from quick, short projects that delivered specific business value to transformational projects that created significant new capabilities.

While there is no one recipe for success, most successful projects in the insurance industry display some common characteristics:

• Clear articulation of expected business value

• Consistent executive sponsorship

• Consistent and frequent communication

• Close coordination with vendors

• Clear use of success metrics

Clear articulation of expected business value

Articulating the business value in advance of a major project is critical: stakeholders need to be on the same page about where the goalposts are, and, equally important, what will be left out of initial implementations or postponed to future phases. Without a clear articulation of these issues up front, CIOs increase the risk of project failure and scope creep. A clear articulation of expected business value also helps keep the IT team’s focus on end results rather than the process itself. Without this, there’s a much higher risk of the proverbial situation where the operation is successful but the patient dies.

This challenge becomes particularly tricky in organizations where IT systems need investment for long-term sustainability, but the business is profitable. Pekin Insurance, a multiline insurer that revamped its entire IT organization, processes and infrastructure over a 20-month period, was able to make a case for major IT upgrades by clearly demonstrating inefficiencies in the company’s decision-making processes. By convincing business leaders that these inefficiencies needed addressing, Pekin’s IT team implemented changes to save over $100,000 annually through infrastructure virtualization and cloud utilization, and improved disaster recovery time from 4 days to 7 hours.

Consistent executive sponsorship

An additional advantage of clearly articulating business value is that it helps secure consistent executive sponsorship, which was cited in nearly every high-impact case study. Without consistent executive support, projects are extremely vulnerable to budget pressures, nay-sayers, and being killed at first sign of trouble. This last risk is very common, since nearly every successful project runs into trouble at some point during its execution.

Executive sponsorship can also help drive cultural changes, as it did at BrickStreet. When the small worker’s compensation carrier was deploying a self-service analytics platform, their biggest challenge was managing user expectations and overcoming resistance to adoption. This was overcome by securing a senior-level champion of the new capabilities. When this executive started producing his own operational and board-level reports, the power of the system was clearly demonstrated. This executive also required his staff to use the tool, and their successes spread demand for the system throughout the organization.

Consistent and frequent communication

Maintaining consistent and frequent communication across all stakeholders (business, IT, and vendor partners if any) is an important part of keeping that executive sponsorship and being able to address challenges as they occur. Clear, consistent communication about expectations and results is an important part of securing and maintaining needed attention levels from business collaborators. Among other benefits, this enables early recognition of small issues before they become big issues or, worse, big surprises.

A notable development this year was the number of projects that included Agile development. In many instances these projects were the first use of Agile by the company, and the improved relationship between IT and other business units that resulted from this adoption was one of the key benefits. This was the case at MiddleOak, a midsize P/C insurer that implemented a new policy administration system in under 18 months using Agile methodologies for deployment.While some IT staff were familiar with Agile techniques, business partners had some difficulty with the first sprints. The company met this challenge by using a hybrid approach with user stories and Waterfall milestones to bridge the knowledge gap.

Close coordination with vendors

With the buy vs. build pendulum seemingly stuck at the buy end of its arc, most significant projects undertaken by insurers are likely to involve solution vendors. Insurer project teams need to collaborate closely with their vendors and regard them as partners in delivering the project. This means that vendors should be selected not just for their technical capabilities or product specifications, but, equally importantly, for their ability to collaborate on delivering successful projects.

Cornerstone, a midsize P/C insurer that replaced their legacy core system with a SaaS platform, relied on a strong relationship with their vendor throughout the replacement process. Cornerstone’s team was new to Agile methodology, so the vendor worked with the company’s IT team to explain the methodology to the board—ultimately resulting in a change of the culture at the company, where the methodology is still in use.

Clear use of success metrics

Clear, easily communicated success metrics are important for managing the project effectively and for demonstrating its value once it is complete. Unum, a large group disability and voluntary benefits insurer, kept track of several metrics to demonstrate the impact of their enrollment data import automation project. Among other metrics, they were able to show a 99.29 percent reduction in system processing time for each automated transaction, and a 73.24 percent reduction in the full-time equivalents required to process them. Being able to document these metrics was critical in claiming victory for Unum’s project team. It also helped to secure additional credibility for the IT group in general and the CIO specifically.

Concluding thoughts: communication is key

Examining the details of successful IT projects yields a broad set of insights into industry trends and common challenges. The trends vary from year to year: this year, more insurers are experimenting with Agile methodology than ever before. But the themes of successful, impactful projects are nothing revolutionary. No matter what year it is, communication and collaboration remain the keys to an effective project.

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